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12. Contingencies
 12 Months Ended
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]  
12. Contingencies

Litigation

 

The Company is subject to litigation from time to time in the ordinary course of its business. There can be no assurance that any claims will be decided in the Company’s favor and the Company is not insured against all claims made. During the pendency of such claims, the Company will continue to incur the costs of its legal defense. Currently, there is no material litigation pending or threatened against the Company.

 

Equipment Repairs

 

During the fourth quarter of 2014, the Company encountered challenges with assembling newly designed cases for its BEOND tablet. As a result, the Company accrued approximately $204,000 of expense for cases deployed at customer sites that the Company has deemed probable it will need to repair. This expense was recognized in direct costs in the accompanying consolidated statement of operations for the year ended December 31, 2014. The Company may continue to experience challenges with its cases, and as a result, it may be required to recognize additional repair expense contingencies in the future.

 

Sales and Use Tax

 

From time to time, state tax authorities will make inquiries as to whether or not a portion of the Company’s services require the collection of sales and use taxes from customers in those states. Many states have expanded their interpretation of their sales and use tax statutes to subject more activities to tax. The Company evaluates such inquiries on a case-by-case basis and has favorably resolved the majority of these tax issues in the past without any material adverse consequences.

 

The Company is involved in ongoing sales tax inquiries with certain states and provinces. As a result of those inquiries, the Company recorded a total net liability of $17,000 and $27,000 as of December 31, 2014 and 2013, respectively, which is included in the sales taxes payable balance in the accompanying consolidated balance sheets. Based on the guidance set forth by ASC No. 450, Contingencies, management has deemed the likelihood as reasonably possible that it will be required to pay all or part of these assessments.

 

In October 2014, the Company received notice from a province that it prevailed on the appeal of a fully-paid sales tax assessment. As a result, the Company recognized a receivable of approximately $108,000, which was recorded in accounts receivable on the accompanying consolidated balance sheet, and reversed an accrued sales tax liability for a post-audit period assessment of approximately $25,000. The Company received the refund in January 2015.